Common Types of Health Plans Offered by Employers
 Each health plan (indemnity, PPO, HMO, Open Access HMO and POS)
offers different coverage, copayments or coinsurance and access — available doctors
and facilities.
Indemnity (fee-for-service) 
This plan allows you to go to any doctor or hospital you choose. There
is no "network" of providers. You go to the doctor and either authorize the
doctor’s office to submit the claim to your insurance company directly or more often
you pay the doctor at the time of service, file the claim yourself and receive
reimbursement from your insurance company. This plan is very flexible, but because of the
freedom to choose any provider you want, premiums and out-of-pocket costs are higher. You
usually must meet a deductible before the insurance company pays any monies toward your
care and you normally have coinsurance of at least 20 percent that you must pay. Under
this plan you are also subject to "allowable charges" or "reasonable and
customary" fees. This means that your insurance company has determined how much it
will pay for a certain office visit or procedure. The insurance company will pay 80
percent of that amount and you must pay the remainder.
Preferred Provider Organization
(PPO, also called PPA for Preferred Provider Association)
The insurance company has contracted with a network of "preferred
providers" (doctors, hospitals, urgent care centers etc.) These providers discount
their fees to the insurance company in exchange for the volume of patients they expect to
treat by being part of the network. If you use a provider from this list the insurance
company pays a contracted amount to the provider. You pay only your copay or coinsurance.
You will not be subject to "reasonable and customary" limits. If you see a
provider outside the network there is a financial penalty for doing so. However your
insurance company shares some of the cost and you pay the difference directly to the
provider. Premiums and out-of-pocket costs are usually less than for indemnity plans.
Health Maintenance Organization (HMO)
This is the oldest form of managed care. HMOs offer a wide spectrum of
medical care including an emphasis on preventive care. The HMO is like a very strict PPO.
You must use the providers in the network in order for your insurance company to pay the
cost of your care. You choose a primary care doctor who coordinates all of your medical
care. You must call or see your PCP prior to seeking medical care except in emergencies as
outlined by your health plan. Your PCP treats you for preventive and general medical care,
and refers you to other doctors or providers within the HMO as needed. Some HMOs allow
direct access to obstetricians/gynecologists and mental health providers without seeing
your PCP. Some states also require direct access to certain providers for all members. The
advantages to an HMO are no paperwork, no deductibles, usually a small copayment for
each service ($10), "out-of pocket maximums" and no preexisting condition
limitations.
Open Access HMO
This is a new form of managed care. In this plan you choose a primary
care physician. However, you may bypass your primary care physician and refer yourself
directly to any provider in the network. You would receive the same level of coverage
whether or not you use your PCP. But you must use providers in the network.
Point-of-Service (POS)
The POS option is like an HMO with greater flexibility. You choose a primary care
doctor who refers you "in network" for the same coverage level as in HMO.
However, you may choose to refer yourself to an "out-of-network" provider and
receive a somewhat lower level of coverage. This is unlike an HMO where there is no
coverage when you use out-of-network providers.
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